meaning of reconciliation in accounting

Reconciliation in accounting refers to the process of comparing and matching two sets of financial records, such as a company’s internal books and external statements (e.g., bank statements), to ensure accuracy. The purpose is to identify and correct discrepancies, ensuring that all transactions are correctly recorded and the financial statements reflect the true financial position of the business. This process is essential for maintaining accurate and reliable financial records, preventing errors, and ensuring compliance with accounting standards.